If retirement is still five to ten years away, FEGLI probably feels like a solved problem — you elected coverage years ago, the premium comes out of every paycheck, and you haven’t thought about it since. That is exactly the point at which it deserves a second look. The choices you make now, or fail to make, can determine whether you can carry life insurance into retirement at all, and what it will actually cost you if you do.
The Five-Year Rule
To continue FEGLI coverage as a retiree, you generally must meet all of the following when your annuity starts:
- You are retiring on an immediate annuity under a federal civilian retirement system. A FERS MRA+10 retirement can qualify, although if the annuity is postponed, FEGLI coverage is suspended until the annuity begins.
- You have been insured for the five years of service immediately before your annuity starts — or for the full period you were eligible to be insured, if that period is shorter than five years. This is known as the “all opportunity” requirement.
- You are enrolled in the coverage on your date of retirement.
- You have not converted the coverage to an individual policy.
Each coverage type — Basic, Option A, Option B, and Option C — is judged separately against the five-year requirement. It is possible to meet the requirement for Basic and Option A while falling short on Option B, for example, if you only elected additional Option B multiples recently. Breaks in service do not count against the five-year period because you were not eligible to be insured during the break. But a period during which you were eligible and did not carry a particular coverage can prevent you from satisfying the five-year requirement for that coverage.
The practical implication for this stage of your career: if you are missing optional coverage you’d want in retirement, five to ten years out is the time to determine whether you have an opportunity to add it and still satisfy the five-year requirement. FEGLI does not have an annual Open Season, so increasing optional coverage may require a qualifying life event, a future FEGLI Open Season, or satisfactory medical evidence of insurability. The earlier you evaluate what you have and what you may want to carry into retirement, the more options may remain available.
What FEGLI Actually Covers — and What It Doesn’t
FEGLI is group term life insurance. It has no cash value, no investment component, and nothing to borrow against. It exists to pay a death benefit and nothing else. That makes it simple, but it also means it is doing one job, and it is worth being clear about what that job is before deciding how much of it you need going forward.
A few things FEGLI does not do: it does not follow you if you leave federal service without either qualifying to continue it into retirement or exercising an available conversion privilege within the required window. It does not build savings you can access later. And the accidental death and dismemberment coverage bundled with Basic and Option A ends at retirement, regardless of which reduction option you choose for your regular coverage.
The Real Cost of Carrying FEGLI Into Retirement
The biggest planning trap at this stage is looking at your current premium and assuming it holds steady. It does not — at least not if you choose to keep full Option B or Option C coverage. Those premiums are based on age brackets, and if you elect No Reduction to preserve the full death benefit rather than let it wind down, you keep paying premiums for as long as you keep the coverage.
Here’s what that looks like for a hypothetical retiree, Denise, who carries $300,000 of Option B (three multiples based on $100,000 of annual basic pay) and two multiples of Option C ($10,000 of coverage on her spouse, plus $5,000 on each eligible dependent child, if any) into retirement. She elects No Reduction on both, so the full coverage amounts remain in place:
| Age Range | Option B Monthly | Option C Monthly | Combined Monthly | Combined Annual |
|---|---|---|---|---|
| 65–69 | $312.00 | $12.26 | $324.26 | $3,891 |
| 70–74 | $558.90 | $16.60 | $575.50 | $6,906 |
| 75–79 | $1,170.00 | $24.96 | $1,194.96 | $14,340 |
| 80 and over | $1,872.00 | $33.80 | $1,905.80 | $22,870 |
These figures use OPM’s currently published No Reduction rates for annuitants. FEGLI rates can change, so the table is an illustration based on today’s rates rather than a prediction of what OPM will charge decades from now.
Option A isn’t in this table because once its reduction begins after age 65 or retirement, whichever is later, the premium stops. The $10,000 coverage then automatically declines by 2 percent per month until it reaches $2,500, with no reduction election to make.
Denise’s numbers show why “keep everything at full value” can quietly become one of the more expensive retirement decisions a federal retiree makes. At age 80 and above, No Reduction coverage on Option B and Option C alone would cost her nearly $23,000 a year under today’s published rates — out of an annuity, not a paycheck. If those rates remained unchanged, cumulative premiums on her $300,000 of Option B coverage beginning at age 65 would reach the amount of the $300,000 death benefit at roughly age 88. Choosing Full Reduction instead allows the coverage to decline by 2 percent of the pre-retirement amount per month for 50 months until it reaches zero, with premiums stopping once reductions begin after age 65 or retirement, whichever is later. Neither choice is automatically wrong. But it is a choice made at retirement on Standard Form 2818, and it is worth running the real numbers well before that form is in front of you.
Option B does not have to be an all-or-nothing election, either. Each multiple can be assigned Full Reduction or No Reduction separately, so a retiree with three multiples could keep one at No Reduction for lifelong coverage and let the other two wind down under Full Reduction — matching the amount of permanent coverage more closely to what’s actually needed rather than choosing one setting for the whole balance.
When to Compare FEGLI to Private or Term Life Insurance
Because FEGLI Option B premiums rise sharply with age while a level-premium term policy locked in earlier generally does not change during the selected term, it’s worth comparing costs before retirement. A private term policy purchased in your 50s or early 60s, while you’re still insurable at a reasonable rate, can sometimes cost less over the same stretch of years than No Reduction FEGLI coverage carried into your 70s and 80s.
The tradeoff runs the other way for anyone with health conditions that would make new coverage expensive or hard to obtain. Existing optional FEGLI coverage that qualifies for continuation into retirement does not require new medical underwriting simply because the employee retires. If your health has changed since you last shopped for insurance, that ability to continue existing coverage may be worth more than the premium difference suggests.
This is also where the conversion privilege can matter. If FEGLI coverage terminates involuntarily — including because you retire without meeting the requirements to continue it — eligible coverage generally can be converted to an individual non-FEGLI policy without a medical exam. The converted policy is not term insurance; it is an individual cash-value policy, and its premiums can be substantially different from group FEGLI rates.
Run Your Own Numbers
The right answer depends entirely on your own coverage amounts, ages, and reduction elections — Denise’s table above is illustrative, not a prediction of what your retirement will cost. The FEGLI Calculator lets you plug in your actual Basic, Option A, B, and C elections and see how the face value and premium change under each reduction choice, both before and after age 65. Running your specific numbers now, while you still have years to evaluate your coverage options, is the whole point of doing this review early instead of at the retirement counter.
For the full mechanics of every FEGLI election, premium table, and administrative rule, see the complete FEGLI Coverage guide.